Things to Avoid While Purchasing a New Home

In the rush of excitement that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of taking their enthusiasm straight to the mall or appliance store. Until the house is really yours, there are still some hurdles to jump. Here are some actions to avoid before closing to assure the transaction goes smoothly.

Don't make expensive purchases. Although you may be dreaming of ways to turn your new home into a castle, avoid major purchases like appliances, electronics, or furniture. We also recommend that you avoid vacations and vehicle purchases until your loan closes. Financing new Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. It's even a mistake to make those large purchases using cash. Lending Institutions are looking at your cash reserve when considering your loan.

Don't look for a new job. Lending Institutions look for a consistent work history on your paperwork. Getting a new career before you start the application process for a mortgage loan may not compromise your approval at all. But for some, changing careers during the loan application process might bring concern and hinder your application.

Don't change banks or move money around in your accounts. Bank statements from the last two or three months for your accounts (savings, checking, money market, and other accounts) will probably be studied as the lending institution makes decisions regarding your loan application. Your lender looks for a consistent rise and fall of your money each pay period, in the interest of ruling out fraud. Even for practical purposes, transferring cash or changing banks may make it harder for your lender to document your account history.

Don't give cash directly to your seller (commonly in cases of "for sale by owner") for earnest money. As a rule, your good faith deposit is yours, not the seller's until the deal closes. Some FSBO sellers might not realize that your good faith funds should go toward your expenses upon closing. An attorney or other type of neutral party can hang onto your deposit, or you may put it temporarily into a trust account until closing. The disposition of earnest funds, if your transaction fails, should be specified in the contract with the seller.

At Amity Mortgage LLC, we answer questions about this process every day. Give us a call: (203) 729-6681.